Bongoman2

Another interesting take on the whole shemozzle from Gulf Business

London-based research consultancy firm Capital Economics has warned that, “Over the medium term, the scale of the liabilities accumulated in the boom years means that Dubai’s debts are likely to cast a cloud on the horizon, leading to periodic bouts of market volatility.”

The IMF has warned that Dubai is risking another boom-to-bust business cycle by pushing up its debt to boost short-term growth at the cost of the medium-term outlook, in a statement concluding its annual mission to the UAE.

shiva

The Arab spring saved Dubai and that cash will stay here for a while however it won't sustain the property bubble for long. Dubai won't be a ghost town for many many years as the region is so unstable it makes Dubai a semi haven but I do foresee multiple boom and busts in the property industry. As I said it'll keep going up for a while yet and how big a crash will depend on both the global economy and regional but it will crash again of that I am 100 % certain.

As a guess and ill correct myself in a couple of months but there is probably another year before a crash as a minimum.

Meow

I agree with this. Unfortunately people are terribly short-sighted and willingly believe the hype.


EDIT. I note that the IMF says the Emirates may need to intervene. The Central Bnak did that at the end of last year by trying to reduce LTVs for borrowers, but caved in to the demands of the banks by backtracking. It would have helped reduce the risk for some.

Blue Cat

I am with you and Meow and anyone else on this, it will crash, I give it 18 months max

Kix

So I'm guessing that HSBC ME top brass haven't a clue what is going on there. Why does this not surprise me.

Bongoman2

In that case where do you think they could find the cash for the world expo development?
assuming of course that they win it

Millhouse

It is not the job of the central bank to set LTVs - it is the job of the bank's credit risk departments.

I don't understand the red comment... who is the 'some' ?

Patsy Stoned

I truly think that Dubai will get Expo2020....it will be a huge boost for the Emirate..I truly hope they get it.. I will rent my villa out for the opening week for the equivalent of half a years rent :-D

Meow

It should be the bank's job, but many don't seem to do a very good job of assessing credit risk, so I think a ruling from the Central Bank would be a good idea. In an ideal world little regulation is required, but this place is far removed from an ideal word.

I wasn't clear in my last comment, but I suggest that if banks took more care in lending money, fewer people would get into financial difficulties such as taking on mortgages that are too large. Again, adults ought to be able to assess this for themselves, but too many just don't and thus need protecting from their own stupidity. There are people in Dubai (and no doubt elsewhere) who are buying property that they can barely afford and who will be adversely affected if/when prices fall and interest rates rise. The defaults will have a knock on effect.

I have seen too many people with massive mortgage debts that they can barely afford, with substantial amounts of negative equity. It's just crazy that banks keep lending in these situations.

Millhouse

thanks.

Personally, I still believe that the consumer is at fault in most lending instances and not the bank. I find blaming banks almost like blaming drug companies when people get addicted to paracetamols/ nytol, or say brewers being blamed for people becoming alcoholics. Both industries have equally large advertising budgets and strategies...

Meow

I don't disagree, but people sometimes need to be protected from their own stupidity.

It also annoys me when people complain about banks, fund managers etc charging fees or making money (within reasonable limits). I mean, it's not as if they are businesses with cost and overheads and actually provide a service, is it?

Bongoman2

Can't tell if that was sarcasm or not?

Norm_uk

Ultimately if there is no harm to others then no one needs protecting. In the case of thousands of potentially bad loans and the after effects of that it's clear regulation is needed.

On fees - everyone goes to work to make money. I've seen how much construction consultants and lawyers make as margins and think some fund managers could learn a thing or two...

N.

shiva

The problem people have with banks was exemified during the crash.
Major banks were selling products they knew to be so shirty that they themselves were hedging against them whilst actively pushing them to clients.
We're that the construction industry there would have been a lot of senior people jailed the banks though got a bail out.

Bongoman2

Does your friend have anything to do with this new feature called 'Easy Cash' from HSBC?

Essentially pre-approved cash advance of your total credit limit which they will transfer to your account.

I swear I get 3 calls a week from different numbers trying to get me to take their cash. They tell me that there are no links on their website for the deal, that my verbal approval is enough to authorise the transfer and that they will send me T&Cs after I apply.

Dodgy